By MARK LANDLER

Published: June 26, 2001

BANGKOK—
Nearly four years after it devalued its currency, unleashing an economic typhoon across Asia, Thailand is still reeling. And while the storm has passed, its aftereffects have proved stubbornly hard to shake, leaving this country in chronic distress.

Thailand's banks are hobbled by bad debt; many of its biggest companies are bankrupt; and its fragile recovery is sputtering, hurt by the economic slump in the United States, Europe and Japan.

For many Thais, the latest setback confirms what they had suspected since the crisis of 1997-98 -- that their country can no longer depend on the global economy. Once the darling of the International Monetary Fund and foreign investors, Thailand is turning inward under the weight of its troubles.

With many neighbors in similar or worse straits, some analysts say that Thailand's nativism could take root elsewhere in Asia. From Malaysia to Taiwan, people are struggling to live without the export-led growth that lifted them out of poverty in the last 20 years. Bewildered and bitter, they are starting to question the economic policies that have been a model for the region.

''People on the streets believe that the I.M.F.'s way of solving problems is wrong,'' said Tongchat Hongladaromp, newly appointed chief executive of the Thai Petrochemical Industry Company, the nation's largest corporate bankruptcy. ''We've got to find a solution that works for Thailand.''

In its hunger for change, Thailand ousted its pro-Western prime minister in January, replacing him with a populist billionaire, Thaksin Shinawatra. Mr. Thaksin has charted a sharply different course, emphasizing growth at home over exports, funneling billions of dollars to banks and farmers and dismissing those, like the governor of the Thai central bank, with whom he disagrees.

This go-it-alone strategy is fraught with risks, not the least of which is a threat to the prime minister's hold on office because of a corruption investigation.

Along with the abandonment of I.M.F.-style prescriptions has come a surge in economic nationalism. Thailand is drafting policies to help local products compete with imports. It has raised the fees for foreigners' work permits. And state agencies have been prohibited from hiring non-Thais as consultants.

This tendency toward isolationism stops short of policies in Malaysia, where the leader, Mahathir Mohamad, inveighs against neocolonial financiers. Thailand has not imposed controls on its capital markets, as Malaysia did in 1998. And it remains a popular destination for foreign direct investment and tourism, though new investment has fluctuated in recent months because of confusion over Thai policies.

While Mr. Thaksin is unnerving some foreign investors, he has won broad domestic support and respectful notices from a few analysts, who are cheered that Thailand is trying something different.

''He's right to say that Thailand shouldn't rely on foreigners,'' said Christopher Wood, a regional strategist at ABN Amro in Hong Kong. ''It's just plain common sense that Asia shouldn't put its bets on exports.''

The I.M.F. itself has taken more of a hands-off role in the last year, since its loan program to Thailand ended. While the lending agency is drafting a report on Mr. Thaksin's policies, its officials are not eager to revive the debate over how best to repair the economy.

''There isn't a particular prescription the fund has, which would or wouldn't work,'' said Reza Moghadam, the I.M.F. mission chief for Thailand. ''The question is, what are the policies which will deliver sustainable growth?''

In many ways, Thailand's next move depends on what happens to its leader. The National Countercorruption Commission ruled in December that Mr. Thaksin, who amassed a fortune from his telecommunications conglomerate, concealed some of his assets when he was deputy prime minister in 1997.

A constitutional court is considering whether to uphold the ruling. If it does, Mr. Thaksin could be banned from politics for as long as five years. While his coalition would retain a majority in Parliament and he could eventually return, it is doubtful a caretaker prime minister could carry out his policies as effectively.

Even if Mr. Thaksin stays in power, he will have to deliver on a campaign that promised something to almost everyone. The government pledged $23,000 to each of Thailand's 70,000 villages for small-scale loans.

It is also setting up a national asset management company, which will take over many of the bad loans from banks in an overdue effort to clean up the financial system. Previous attempts to do this failed because toothless bankruptcy laws emboldened debtors to be recalcitrant.

Analysts worry that unless these programs are run with discipline, they could easily devolve into corrupt bailouts. ''I don't see Thaksin cracking the heads of his friends and supporters to do what is right instead of what is popular,'' said Jeff Earhart, research manager at DBS Thai Danu Securities here.

Some analysts also worry that if the verbiage of economic nationalism is pushed too far, it could mutate into xenophobia. Thailand has tended to be less suspicious of foreigners than other Asian countries because -- as any schoolchild here will tell you -- it was never colonized.